Fake Reviewers Get Zero Stars From New York Attorney General

Some reputation management companies required that its writers have a certain number of Yelp friends. Yelp says it welcomed the New York attorney general's crackdown on fake reviewers.

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Originally published on September 25, 2013 11:04 am

No doubt most of you reading this post have looked at Yelp or Google+ Local to check the user reviews before you tried that fish store, bakery or even dentist. On occasion, you may have wondered if some of those reviews were too good to be true.

It turns out that some of them were.

New York's attorney general revealed the results of a yearlong investigation into the business of fake reviews. Eric T. Schneiderman announced Monday that 19 companies that engaged in the practice will stop and pay fines between $2,500 and $100,000, for a total of more than $350,000 in penalties.

Schneiderman said his office used undercover agents. One agent, posing as the owner of a yogurt shop in Brooklyn, called up search engine optimization companies and asked for help in combating negative reviews on consumer websites. In many cases, the agent was told that they would write fake positive reviews for a fee.

One of the reputation companies required its freelancers to have an established Yelp account more than three months old, and at least 15 reviews and 10 Yelp friends. The jobs paid the false writers — who lived as far away as Bangladesh and the Philippines — between $1 and $10 per review.

The investigation also uncovered businesses that did their own reputation management. For example, US Coachways, a charter bus company on Staten Island, had its employees write positive reviews and offered $50 gift certificates to customers who would do the same — without requiring those customers to reveal the gift.

Ratings website Yelp says it welcomed the crackdown. However, the company has also been accused of manipulating reviews on its site by merchants who claim Yelp offered to move positive feedback closer to the top of the page for a payment. Yelp denies this.

The practice of putting up fake positive reviews is called "astroturfing" — the 21st century version of false advertising, which is illegal. "Prosecutors have many tools at their disposal to put an end to it," Schneiderman says.

Business have a lot to gain from astroturfing. A highly cited Harvard Business School study from 2011 found that a one-star rating increase on Yelp can translate into a 5 percent to 9 percent revenue growth for a restaurant. A Cornell study found that one extra star on TripAdvisor is tied to an average of an 11 percent rise in room rates for hotels.

The research firm Gartner projects that by 2014, between 10 and 15 percent of online reviews will be fake. It's hard to know what long-term effects this crackdown and similar law enforcement will have on that number.

Among the 19 companies that are part of the New York attorney general's agreement are search engine optimization company Zamdel Inc., hair removal business Laser Cosmetica and New York City's Metamorphosis Day Spa.

Copyright 2014 NPR. To see more, visit http://www.npr.org/.

Transcript

ROBERT SIEGEL, HOST:

Now to the other big tech story of the day. Nineteen companies have reached a settlement with the New York state attorney general to stop posting fake reviews on sites like Yelp and Citysearch. These are sites that let consumers rate products, restaurants and services. The agreement comes after a year-long investigation into the practice of using false reviews to enhance the online reputation to businesses. NPR's Laura Sydell joins us now to talk about it. Hi, Laura.

LAURA SYDELL, BYLINE: Hi.

SIEGEL: And first, what exactly were these firms doing?

SYDELL: Well, the attorney general used an undercover agent who posed as the owner of a local yogurt shop in Brooklyn, and the agent called around to what are called reputation management companies, asking for help dealing with negative reviews online. Many of these online reputation companies said they could offer up some fake reviews to help counter the bad ones.

And the New York attorney general found that the reputation management companies were paying people from as far away as Bangladesh to write the reviews between - they were paying between one and $10 to pretend they've been Brooklyn. There's a term used for that these days. It's called astroturfing.

SIEGEL: Right. I'm sorry to laugh at this criminality that's been described. But who are some of the companies and firms cited in the settlement agreement?

SYDELL: Well, there are reputation firms like Zamdel Inc. And the AG also charged a few business with trying to get their own employees or paying people to review them, and that included a company like US Coachways, which is a national charter bus company on Staten Island and Body Laser Spa and a Medical Message Clinic.

SIEGEL: OK. So it was misleading, unethical. But what law is violated here?

SYDELL: Well, the AG is using old laws here. Essentially, the AG, the attorney general, says this is the 21st century version of false advertising. And they've got a whole bag of laws on the books all ready to deal with it.

SIEGEL: Any response from, say, the online review sites like Yelp?

SYDELL: Yelp says it welcomes the actions by the New York attorney general, and the company says it has its own tools to try and detect fake reviews. The only thing I should say is that Yelp itself has been accused of calling business owners and saying, hey, we'll put more positive reviews up higher on the list so people see them for a price. So Yelp's got its own problems.

SIEGEL: How much do people really rely on these reviews to make decisions about products, restaurants, so forth compared to, say, someone you know telling you that's a good restaurant?

SYDELL: Well, actually, there have been studies of this, Robert, and these reviews can really help or hurt a business. According to one survey, 90 percent of consumers say online reviews influence their buying decisions. And a highly cited study by Harvard found that a one-star rating increase on Yelp translated into a five to nine percent increase in revenue. So people really do rely on them.